Futures Fall as Oil Jumps 4%; PepsiCo Cuts Outlook, Chip Stocks Slide

Good morning. This is Trade and Ticker. Thursday, October eighth, twenty twenty-six. Let's get ready for the opening bell — everything you need before U.S. stocks start trading.

Daily Catalysts. Four things to watch today. First, oil, with Brent crude jumping more than four percent on new attacks on shipping in the Gulf and a hurricane shutting in U.S. offshore production. Second, Treasury yields, and a thirty-year bond auction at one o'clock Eastern. Third, the Fed, with Governor Christopher Waller laying out his case for more rate hikes this morning, plus weekly jobless claims at eight-thirty Eastern. Fourth, earnings and chips: PepsiCo reported this morning, and chip stocks are lower again even after a record profit forecast from Samsung. We'll get into each of these as we go.

Let's start with U.S. futures. The board is pointing lower for a second straight day. As of about eight o'clock Eastern, Dow futures are down about three-quarters of a percent, or roughly three hundred eighty points. S-and-P futures are down about four-tenths of a percent. Nasdaq futures are down about two-thirds of a percent. The Dow and tech are leading the way down again.

That follows a pullback on Wednesday. The Dow finished about two-thirds of a percent lower, down roughly three hundred forty points, snapping a four-day winning streak. The S-and-P and the Nasdaq each finished about two-tenths of a percent lower, a day after both closed at records. Smaller companies had a tougher day, with the Russell two thousand down about one-point-three percent.

Now rates. The ten-year Treasury yield is back up to about five-point-three-two percent, from about five-point-two-eight at Wednesday's close. On Wednesday it touched its highest level since two thousand two before a strong ten-year auction helped it ease. The thirty-year yield is around five-point-seven percent. Higher oil means more inflation worry, and more inflation worry means higher yields. That is the pressure on stocks this morning.

Oil is the big mover. Brent crude is up about four and a half percent to roughly one hundred five dollars a barrel. U.S. crude is up about four and a half percent as well, to around ninety-two dollars. Two things are driving it. Attacks on tankers in the Gulf and the Strait of Hormuz have picked up, with a tanker north of Qatar struck on Wednesday. And Hurricane Isaias is heading toward the northern Gulf Coast. As of Wednesday, about a quarter of Gulf of Mexico oil production had been shut in, according to the federal agency that oversees offshore drilling, and Shell and Chevron are among the companies cutting back. On top of that, according to NBC News and Axios, the Pentagon has been told to be ready for possible new strikes on Iran, though no decision has been made.

In early trading, energy is higher. Exxon Mobil and Chevron are each up about two percent. Chip stocks are lower again. Broadcom is down nearly two percent after a Wall Street Journal report that it is working to arrange more than fifty billion dollars in financing tied to the custom A-I chips it is building with OpenAI. Micron is down nearly two percent, Marvell is down a little more than two percent, and Nvidia and A-M-D are down between one and a bit more than one and a half percent. Taiwan Semiconductor is down more than one percent, even though its September sales jumped about fifty-five percent from a year earlier. And NXP Semiconductors is down more than two and a half percent after Citi downgraded the stock to neutral.

On the upside, a few standouts. Wolfspeed, the silicon carbide chipmaker, is up about fifteen percent after landing a conditional loan commitment of up to one-point-five billion dollars from the Defense Department. Haemonetics, the blood and plasma equipment maker, is up more than ten percent after its customer CSL said it expects to finish rolling out Haemonetics' plasma collection system across its U.S. centers by the end of twenty twenty-seven. And Palantir is up about two and a half percent after analyst Dan Ives started coverage with an outperform rating and a two-hundred-fifty-dollar price target.

From last night's earnings, Levi Strauss is down about three percent. Adjusted profit beat expectations with help from tariff refunds, but revenue came in a bit light and U.S. sales fell. Applied Digital, the A-I data center builder, has been swinging between small gains and losses after its revenue more than quadrupled from a year ago.

Quickly overseas. Tokyo and Hong Kong each fell about one and a half percent. South Korea dropped more than two and a half percent. Europe is down about two-thirds of a percent.

Now let's get into those four things to watch.

First, oil. A four percent jump in crude lands right when the bond market is already nervous about inflation. Watch two things through the day: the track of Hurricane Isaias, and any new attacks on shipping in the Gulf. The Pentagon reports add a third layer of risk. If oil keeps climbing, energy stocks win, but airlines, shippers, and consumer names feel it. Delta Air Lines reports tomorrow morning, and fuel costs will be front and center.

Second, yields and the auction. The Treasury sells twenty-two billion dollars of thirty-year bonds at one o'clock Eastern. Wednesday's ten-year auction drew strong demand and gave stocks some relief. A repeat would help. A weak result, with buyers demanding a higher yield, could push the thirty-year back toward its two thousand two highs and put fresh pressure on big growth stocks.

Third, the Fed. In a speech this morning, Governor Waller said he expects more rate hikes will be needed to bring inflation back to the Fed's two percent goal. But he said there is flexibility on timing, and that the hikes do not need to come at back-to-back meetings. That leaves the door open to a pause at the Fed's meeting at the end of this month, with a possible hike in December. Traders are already leaning that way. Minneapolis Fed President Neel Kashkari and St. Louis Fed President Alberto Musalem also speak today. Weekly jobless claims come out at eight-thirty Eastern. A low number would point to a job market strong enough to keep the Fed on track to hike again.

Fourth, earnings and chips. PepsiCo is up close to two percent in early trading. Third-quarter profit and revenue topped expectations, with net revenue up about five and a half percent to twenty-five-point-three billion dollars and adjusted earnings of two dollars and thirty-four cents a share. International sales did the heavy lifting. But Pepsi cut its full-year profit forecast and said its North American turnaround is taking longer than planned, and it promised more cost cuts. On chips, Samsung forecast a record quarterly profit, but it was not enough to lift Asian tech stocks, and that weakness is spilling into U.S. chip names this morning. Add the Broadcom financing report, and the question hanging over the A-I trade is how much debt it takes to pay for all these chips.

Here's what would make a lower open worse. Watch three things. First, Brent pushing well past one hundred five dollars on new Gulf attacks or hurricane damage. Second, a weak thirty-year auction that sends long-term yields back to their highs. Third, a jobless claims number or Fed comments that lock in more hikes. On the other side, a solid auction and some calm in the oil market could bring buyers back.

So here's the picture heading into the open. Futures are lower, with the Dow and tech leading the way down. Oil is up more than four percent, with Brent near one hundred five dollars, and the ten-year yield is back around five-point-three-two percent. Chip stocks are under pressure again, energy is higher, and PepsiCo is rising despite cutting its outlook. The thirty-year auction at one o'clock is the big test of the day.

We'll be back at midday with the lunch show: how stocks are handling the jump in oil, how the bond auction is shaping up, and a look ahead to Delta's report tomorrow morning. Thanks for listening. I'm Trade and Ticker.